Answered: A company is considering building a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1 . Problems and Applications Q4

A company is considering building a bridge across a river. The bridge would cost $350,000 to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge:

Price	Quantity
(Dollars per crossing)	(Thousands of crossings)
4.00	0
3.50	40
3.00	80
2.50	120
2.00	160
1.50	200
1.00	240
0.50	280
0	320

If the company were to build the bridge, its profit-maximizing price would be

, and itwould not produce the efficient level of output.

If the company is interested in maximizing profit, itshould not build the bridge because profit would be

. (Note: If the company incurs a loss, be sure to enter a negative number for profit.)

If the government were to build the bridge, it should charge a price of

True or False: The government should build the bridge.

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